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Ruble Strengthens to Two-Week High on Oil, Stimulus Speculation

Aug. 23 (Bloomberg) -- The ruble rallied to the strongest in two weeks as oil gained on speculation central banks in the U.S. and China will ease monetary policy to stimulate growth.

The Russian currency advanced 0.7 percent versus the dollar to 31.6800 at 7 p.m. in Moscow. It weakened 0.4 percent against the euro to 39.8899, leaving it 0.1 percent higher against the central bank’s currency basket, which is 55 percent dollars and 45 percent euros.

Brent crude rose as much as 1.3 percent to $116.38, the highest level since May, after the U.S. Federal Reserve signaled readiness to boost record stimulus, according to minutes of July 31-Aug. 1 meeting published yesterday. People’s Bank of China Governor Zhou Xiaochuan said yesterday that adjustments to rates and bank reserve requirements can’t be ruled out.

“The ruble is indeed relatively robust today, at least relative to other emerging markets currencies,” Vladimir Osakovskiy, chief economist at Bank of America Merrill Lynch in Moscow, said by e-mail today. “We tend to attribute that to strong oil prices.”

Investors pared bets on the ruble weakening against the dollar, with non-deliverable forwards showing the currency at 32.1564 in three months versus 32.3951 on Aug. 22.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell two basis points to 220, according to JPMorgan Chase & Co.’s EMBI Global Index. Yields on the government’s ruble bonds due April 2021 rose two basis points to 7.9 percent, data compiled by Bloomberg show.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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